The latest data on U.S. housing starts and retail sales have caused doubts among some observers about the strength of the American economic recovery. In June, housing starts declined 9.9 per cent, while core retail sales suffered a 0.1 per cent decline.

None of this data suggests the U.S. recovery is coming to a halt. But if a negative trend begins to develop in future data, economists may be forced to lower their expectations for growth in the second half of the year.

Stock markets in the U.S., however, are not reflecting much concern about the potential for slower growth. Rather, as Bank of America’s latest monthly fund manager survey indicates, the pros are pulling out of their positions in emerging markets and piling into the U.S. market.

This “rotation” not only reflects optimism about the U.S. economy. It also reflects a view that the Chinese economy will weaken over the next year or so. The survey indicates that respondents also have a negative view on commodities but a positive view on the high-flying Japanese stock market.

Yet, to some extent, these views reflect what has already happened in markets. Contrarian investors, therefore, may find opportunity in less popular markets now, including Canada’s.